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The Alibaba culture: kung fu commerce with a dash of theatre

The sheer size of the Chinese e-commerce market may make Alibaba's initial public offering (IPO) highly coveted, but investors could be in for a bumpy stretch as the Chinese behemoth battles with waning market share and competition from new mobile platforms

BEIJING/HONG KONG - When Jack Ma and his colleagues sat down in 2001 to lay out Alibaba's defining values, they named them after a martial arts technique drawn from Ma's love of kung fu novels and their heroic themes.

But the corporate culture of China's biggest e-commerce company also draws heavily from Western values in a mix of East and West that Ma dubbed 'Hupan culture' after the apartment block in Hangzhou where he set up his business.

These core values, now named the 'Six Vein Spirit Sword' - customer first, teamwork, embrace change, integrity, passion and commitment - shaped Alibaba Group Holding, which began as an online bulletin board for companies in Ma's Hupan Huayuan apartment complex in eastern China.

Alibaba's aspirations helped it grow from just 18 employees to more than 20,000 today. Along the way, it knocked eBay Inc out of China and is now preparing for a US stock listing that could be the biggest tech IPO to date.

But its romanticism - and even cultishness - has sometimes sidelined the business reality, almost bankrupting Alibaba in its early years and more recently denying Ma his preferred Hong Kong stock listing.

"Alibaba is not like a Chinese company, it's a blend of the good parts of East and West," said Andrew Teoh, a former Alibaba executive and founder and managing partner at Ameba Capital."It's grown huge, but they maintain a start-up culture. Alibaba is a flat structure, bureaucracy is a pet hate there."

Crucial to this was Savio Kwan, a former General Electric executive, who lifted from the US conglomerate's playbook to introduce a reward system that was new to China at the time. Half an employee's annual appraisal was to be based on their performance.

The other half depended on how well they embodied Alibaba's core 'kung fu' values. "We wanted to make sure that even in a company of 10,000 people it had this Hupan culture, a start-up culture," said Porter Erisman, a former vice president at Alibaba and director of "Crocodile in the Yangtze", a documentary on Alibaba's first decade.

"We didn't want to lose the sense of innovation and teamwork, so those were the systems Savio helped introduce." Kwan, who joined Alibaba as chief operating officer in 2001 and left the company in 2012, did not respond to e-mail and phone requests for comment.